July 7 (Bloomberg) -- Customers coming to Siam Motor Sales’
Bangkok showroom for a Nissan Motor Co. March compact car leave
with a place on a five-month waiting list instead.

“Five to 10 people come in every day asking about it,”
Wiwat Manuthad, a Siam Motor salesman, said. About 8,000 buyers
have ordered the vehicle, which starts at 375,000 baht ($11,600)
he said.

Thailand’s auto production is projected to rise 60 percent
this year as Nissan, Ford Motor Co. and Toyota Motor Corp. boost
output to meet rising domestic and overseas demand. The car
industry’s share of the nation’s economy has grown to more than
10 percent, helping offset a slump in tourism after the
country’s worst riots in almost two decades earlier this year.

“The government has been consistent in its support for the
auto industry and made it a priority, which is why you have seen
the industry grow,” Joe Hinrichs, president of Ford’s Asian and
African operations, said in an interview. Ford, which has cut
its U.S. workforce 47 percent since 2006, plans to make its
Focus model at a new $450 million factory in Thailand by 2012.

Thailand’s finance ministry raised its 2010 growth forecast
for the second time in three months on June 29 as a recovering
global economy lifted overseas shipments, cushioning the
economic impact from the political unrest. Gross domestic
product may expand 5 percent to 6 percent in 2010, the ministry
said.

Output Doubles

Thailand’s auto output doubled to 620,116 vehicles in the
first five months of 2010, the Thai Automotive Club trade group
said May 17. Carmakers restarted idled production lines as
global demand recovered from a recession, while Thailand’s
economic growth and low borrowing costs boosted demand at home.

Automakers may produce a record 1.6 million vehicles in the
country this year, according to Kasikorn Research. Thailand,
with a population of 67 million, may be Southeast Asia’s biggest
car market this year, with sales rising to 630,000 vehicles from
about 550,000 in 2009, according to Westlake Village,
California-based research company JD Power & Associates.

Japanese carmakers are shifting some production to Thailand
from their domestic plants as the yen gains against the dollar
and euro, making exports from Japan less profitable. The yen has
strengthened 5.8 percent against the dollar so far this year.

Yen’s Gain

Japan’s currency rose versus 15 of its 16 major
counterparts today as speculation the global economy’s recovery
will falter boosted demand for the yen’s relative safety.

Yokohama-based Nissan fell 2.5 percent to close at 624 yen
today in Tokyo trading, extending its decline this year to 23
percent.

Automakers are also taking advantage of Thai tax incentives
introduced in 2007 for companies that produce small and fuel-efficient cars. Nissan’s March is among the models that qualify
for the program, which has attracted as much as $1.07 billion in
investment from five Japanese carmakers so far, according to
Thailand’s Board of Investment.

‘Great Results’

Nissan, Japan’s third-largest carmaker, will produce 90,000
March cars this year in Thailand and plans to export them to
other Southeast Asian countries, China, Japan and Australia, the
company said on June 30.

The government’s support for carmaking has yielded “great
results,” Nissan’s Chief Executive Officer Carlos Ghosn said
last month in Bangkok. “Cars exported from Thailand are
extremely competitive.”

Toyota, the world’s largest automaker, may also shift more
output to the Southeast Asian nation from Japan, the company
said June 30.

Toyota assembles the Vigo pickup truck and Fortuner sport-utility vehicles in Thailand for overseas markets such as
Australia and the Middle East. The carmaker is running its
factory in Samrong, a province within the Bangkok metropolis, at
close to full capacity. As many as 1,165 trucks leave the
factory each day, with one vehicle rolling off the production
line every minute on average.

Mitsubishi Motors

Toyota, whose subcompact Vios is the best-selling passenger
car in Thailand, has raised its sales forecast for the country
to 270,000 vehicles this year from an earlier estimate of
250,000, Kyoichi Tanada, president of the carmaker’s Thai unit,
said in an interview.

Mitsubishi Motors Corp., which makes Pajero SUVs at its
factory in the eastern province of Chonburi, may spend 15
billion baht to build a new Thai plant, the Tokyo-based company
said July 5.

Mitsubishi may use the country as a base to make a new
small car to be priced at less than 1 million yen ($11,400),
President Osamu Masuko said. The carmaker may build as many as
200,000 units of the model in Thailand annually, he said.

GM plans to build a new midsize Chevrolet truck in Thailand
for export to Europe and parts of Southeast Asia, Martin Apfel,
executive director for the Detroit-based carmaker’s Southeast
Asian operations, said on June 30. The company aims to sell at
least 100,000 units of the truck in the first year, he said.

Investment by foreign carmakers is helping Thailand’s
economy weather a slump in tourism. Tourist arrivals fell 11.8
percent to 815,000 in May as political violence killed 89 people
and damaged buildings including Central World, the nation’s
biggest shopping mall.

Rising Competition

Even as the local car industry grows, it faces rising
competition in Southeast Asia from Indonesia and Vietnam, said
Vivek Vaidya, automotive and transportation director at research
company Frost & Sullivan.

“The two are large markets in themselves, with low
penetration of cars and a large population,” Singapore-based
Vaidya said in a phone interview.

Nissan said June 29 it will invest $20 million in Indonesia
to double annual production in the country to 100,000 vehicles.
The carmaker is also considering Indonesia as an export base and
will establish a research and development center in the country
next year, CEO Ghosn said.

GM aims to reopen an idle factory in Bekasi, Indonesia
within the next two years, Apfel said. The plant will produce a
7-seat vehicle tailored for the domestic market and may require
about $100 million in new investment, he said.

A large supplier base helps give Thailand an edge over its
low-cost manufacturing rivals, Frost & Sullivan’s Vaidya said.
The nation has more than 2,300 auto parts manufacturers and
dealerships, according to the Board of Investment.

Nissan plans to produce 200,000 cars in Thailand this year,
making full use of its existing capacity. The popularity of the
March is unprecedented, said Siam Motor’s Manuthad.

“I’ve been in this business for 20 years and have never
seen such a popular car,” he said.